The Rise of Middle Class

This data is used as reference to build communication platform for Panasonic.

Asian Middle Class

• The emerging middle-class consumers differ in their preferences, demands andhabits. People belonging to this class are not wealthy enough to spend as much asthey would like to and they are extremely conscious and sensitive about their statuswhere they are sandwiched between the wealthy and grassroots.

• The middle class in Asian emerging markets is made up of a younger populationcompared to their counterparts in the US and Europe.

• Young middle-class consumers are particular about product quality, trendiness anduser experience, which are reflected by the values associated with a brand. They willonly stick to trusted and widely recognised brands. Apart from the quality of aproduct/service, these consumers also take into account the buying experience suchas the vendor’s sales service and product/service knowledge, plus the after-saleservices.

• Thirdly, the emerging middle class is embracing online shopping. Thanks to years ofdevelopment of B2C, C2C, group buying and ranking e-commerce websites, onlineshopping is gaining popularity through promotions on various social media platformsincluding Facebook, blogs and microblogs.

Indonesian Middle Class

• There are 75 million middle-class consumers in Indonesia, which will increase by 10million per year for the next 10 years.

• These emerging middle income earners – said to number 35 million – are provingeager and discerning consumers, who will seek out and pay for quality. They are akey driver of the Indonesian economy, tipped to increase by more than 6 percent in2013.

• Gleen Maguire, chief economist for the Asia-Pacific region at ANZ, believed thatIndonesia's economy will improve in the next five years. In addition 79 percent ofIndonesian people will have an improved financial condition a year ahead asIndonesia has survived from the Federal Reserve's tapering off.

• By 2020, China’s middle class will become the top consumers, while India andIndonesia will rank third and eighth respectively. By 2030, the middle-classpopulation will account for more than half of the overall population in most of thedeveloping Asian countries. By then, Asia’s annual expenditure will amount to USD32 trillion, or 43 percent of the global total.

• Indonesians are getting more confident with their financial condition that it would encourageconsumption.

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ANZ-Roy Morgan Indonesian Consumer Confidence (2005 - 2014)

January 2014

• The survey includes the Top 22 cities, smaller cities and towns as well as many more villages inthe rural hinterland, reflecting all of Indonesia. Men and women aged 14 and over wererandomly selected during the month of January 2014.

• Indonesia’s consuming class — people whose daily spending ranges from US$2-$10 — willdouble to 150 million people over next 10 years, ANZ-Roy Morgan Research predicts.

ANZ-ROY Morgan Indonesia Consumer Confidence Table

Source

Research Journal

ANZ-Roy Morgan Indonesian Consumer Confidence: Statistical Release , February 2014.

BCCI Bulgaria: Indonesia The Next Economic Powerhouse, 2013.

KPMG Adversory China: The Rise of the Middle Class in Asian Emerging Markets, April 2012.

Home Appiance Consumption

The developing economy of Indonesia is going through anupgrading phase where consumers are switching tonewer, better, and more expensive technologies. Householdsin the world’s fourth largest country are buying more of andupgrading their small domestic appliances such as ricecookers, vacuum cleaners, blenders, irons and electric fans, etccontributing to sales of over 24 million units worth USD595million in 2012.

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Consumer Electronics

Major Domestic Appliance

Small Domestic Appliance

Total

Market Highlight

• Consumers’ purchase of LED TV this year increased so quickly over last year. Thisyear 2 out of 3 total flat-screen TVs sold were LED, while last year's 1 out of 4 TVssold was in this segment. Driven mainly by the manufacturers and cheaper price ofLED TVs are the main reasons in the growth of these products.

• Air conditioner continued to gain around 28% in April, albeit of its slight decline compared to last year. Inverter share in air conditioner remains small compare to air conditioner with no inverter which is only 9%, and 91% share still driven by the non-inverter function. Price remains a consideration for consumer whom still prefer the non-inverter function.

• Market for cooling/fridge continued to show a strong growth with around 20% increase compare to previous year. The sales remained dominated by 1 door cooling which contributed around 64%. However, the shift in trend towards the middle and mid high segment indicated the increase in consumer purchasing power as well as the growth of replacement market.

Market Highlight

• Washing machine sales increased up to 42% in January 2013 compared with thesame month last year. Although the market is still dominated by segments doubletub at 51%, but there is also a huge growth in the segment front-load, ie up to75%. It shows the evolution of consumer demand towards products with betterquality.

• The Small Domestic Appliances (SDA) market in Indonesia in the last 12 monthstotaled more than USD 1.6 billion, expanding by nearly 6 percent in valuecompared to the same period a year ago. According to GFK retail audit findings, thisvalue growth is a result of consumers buying nearly one million more smallhousehold appliances such as food preparation appliances, irons, rice cookers andvacuum cleaners compared to the previous year.

Source: GFK Market Insight Indonesia, January-April 2013.

Panasonic on Media

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